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80 thoughts on “IGEES paper: Structural Reform”

Table 8: Under Labour activation measures :
Scenario 2, where labour market ‘reforms’ are channeled into income tax reduction.
Why does the unemployment rate reduce by 3.5% in 2020, but there is a 0% change in employment levels? Am I misreading this?

MEP Brian Hayes in the Sunday Times said had warm words for the approach, commenting in the context of the diminishing prospects for retrospective bank recapitalisation; “We have got to be looking at alternatives that would help Ireland recover fast, but would be, effectively support in lieu of bank recapitalisation or retroactive support”.

It was discussed between Merkel and the Taoiseach which suggests that the DIW logic may be gaining round in the general context of reviving economic growth in Europe.

The authors, Niamh Callaghan, David Hegarty, Terence Hynes, Matt McGann, Brendan O’Connor and Laura Weymes are economists in the Departments of Finance and Public Expenditure and Reform and are members of the Irish Government Economic and Evaluation Service (“IGEES”).

The authors wish to acknowledge with thanks the contributions of the following ESRI research staff: John FitzGerald, Edgar Morgenroth, David Byrne, Adele Bergin, Iulia Siedschlag, Seamus McGuiness, Elish Kelly, John Curtis and Conor O’Toole.

@ESRI

I’m not being ‘picky’ – but has anyone figured out ‘how’ & ‘why’ a reasonably bright bunch such as yourselves ‘Failed Abysmally’ in spotting that SOCIAL & Economic ‘Spot of Bother’ that recently landed on Hibernia?

The first step in structural reform should be to get rid of worthless overpaid pen-pushing unelected bureaucrats like Owen Keegan. Planning decisions should be made by democratically-elected politicians, not useless unelected jobsworths. Politicians are far from perfect, but it is difficult to imagine any politician who hoped to be re-elected displaying the monumental contempt for the public (400,000 of them), the tourist industry and the commercial wellbeing of Dublin that Keegan has displayed this past few days. On top of which, a total arrogance that refused any compromise, or even discussion of a compromise.

The next step should be to ease the whole planning process to allow critical infrastructure investments to proceed. Bertie Aherne has been completely vindicated in his plan to provide Ireland with a world-class stadium away from centres of population. His plan was scuppered by gobsh*tes saying that Ireland didn’t need such a stadium because it was too far away from centres of population and, anyway, Ireland had Croke Park. Now the same gobsh*tes are saying that you can’t hold an event in Croke Park because its too close to centres of population.

As a result of today’s debacle, Fine Gael/Labour will feel the wrath of rural Ireland at the next election. It has also brought Fianna Fail and Sinn Fein closer together and demonstrated that they actually do come from the same gene pool after all. Despite the Marxist gibberish spouted by Sinn Fein leaders, I doubt if it goes deep among their supporters, who are fundamentally different from the supporters of the other left-wing parties. Can’t imagine Labour, Socialist Worker, People Before Profit, Green Party supporters inundating their leaders with emails and phone call to demand that they do something to save a concert by an American country singer. But, Sinn Fein supporters did. The prospect of a Fianna Fail/Sinn Fein coalition after the next election has certainly risen.

I sincerely hope this year’s All-Ireland Final goes to a tenth replay.

Its not playing the man. Keegan has made a decision that ruined the summer holidays for tens/hundreds of thousands of people (not me, I wouldn’t have been going) and cost Dublin hotels, shops and restaurants over 50 million euro. Plus lots of reputational damage. However, they were mostly rural not-rich people, so the Dublin 4 elites don’t care, and are actually gloating at it. Its ludicrous to say that someone making such a decision should not be criticised and attacked for it. If Bertie was still Taoiseach, there is no way this would have happened.

JTO,
You are quite correct. In another time for another act , Bertie would have made a statement siding with the residents & the concert would have gone ahead & a few bob would end up in the right place. Good to see you nailing your colours to FF/SF mast.

I think if you check the latest opinion polls, the combined FF/SF vote is about 45 per cent, while the combined FG/Lab vote is about 30 per cent.

SF would never be my first choice (or even any choice). I’d sooner have an FF government on its own. But, as long as FF have a lot more TDs than SF (very likely), I can stomach SF in government.

As I believe you are an FG supporter, do you ever consider why FG are doing so badly in the polls, despite the undoubted recovery in the economy? Although I’d never vote FG, I give them credit for the economy, which is now the fastest-growing in Western Europe and likely to remain so for several years, and for unemployment, which is falling rapidly. Full marks to Michael Noonan. So, why hasn’t this translated into increased support for FG in the polls, instead of going from bad to worse? I’ll explain why.

The divide in Ireland is not economic or ideological. Its cultural. On one side of the cultural divide is largely rural/small-town Ireland, or first-generation descendants of rural/small-town Ireland that migrated to Dublin. This culture is nationalist, still largely-Church going, GAA-loving, country-music loving. It doesn’t give a f*ck for the Dublin 4 elites and West Brits, or the Conor Cruise O’Briens or the Baciks. On the other side of the cultural divide are the Dublin 4 academia and Fintan O’Foole-media elites, the Bacik Labour Party, the Green Party etc. This Dublin 4-culture has nothing but loathing and contempt for the former for the culture of rural/small-town Ireland, a loathing which is demonstrated every day on this site.

Within each of the cultures you can have right or left. Thus, FF and SF are largely on the same side in the cultural divide and will be easily able to form a coalition, despite the latter having skin-deep left-wing economic polices, which will almost certainly be totally abandoned 5 minutes after going into coalition with FF. FG’s problem is that they have a foot in both camps. Many of their supporters in the country are indistinguishable culturally from FF and SF. However, their leadership identifies far more with the Dublin 4 elites. Fine Gael’s electoral decline, despite the improving economy, is largely because, in a whole host of ways, Enda Kenny has identified completely with the Dublin 4 elites. FG supporters in rural small-town Ireland are deserting in droves. Because its a cultural phenomenon, it will continue even if the economy continues to recover. FG’s only hope is to dump Kenny and replace him with someone more in tune with the culture of rural small-town Ireland.

The Garth Brooks fiasco highlights this cultural divide. The Dublin 4 elites hated every thing about it. They hate the GAA. They hate country music. They hate the Aikens because they are northern nationalists and successful. When the Garth Brooks concerts were first announced, the Dublin 4 elites sneered at all these ‘culchies’ buying tickets for a ‘redneck’ cowboy country singer from America (actually, I’m told he’s quite liberal, but he looks like a ‘redneck’ cowboy). Now that the personification of Dublin 4, Owen Keegan, has forced the cancellation of the concerts, the Dublin 4 elites are in full gloating mode over the financial losses and heartbreak that many of these ‘culchies’ are now experiencing. Never mind some 50-year-old woman in Roscommon, who hasn’t had a great life, but who spent all her modest savings to book a few days in Dublin and see Garth Brooks in person, its all a big joke to the Dublin 4 elites. Serves her right for being so thick that she wants to spend her money on an American country singer.

So, sneer at FF/SF if you like. Whether its FF alone, or FF/SF, that form the next government, gobsh*tes like Owen Keegan will out on their ear. And Peter Aiken will survive too. He’ll bring Garth Brooks back, not for 5 concerts, but 10. And they’ll be in Belfast, not Dublin.

I fully agree that the handling of the Brooks affair has been an unmitigated ‘reputational’, let alone social and economic, disaster.

Mad Oul_Jozie down_the_road is leppin furious – now that she has the ‘bus pass’ & the ‘letter of comfort’ she is gone mad for the travel and craic. An avid ‘Van the Man Fan’, She would love to ‘jive an’ boogie in Belfast.

Your cultural analysis has some merit, if somewhat biased. Now that we expect the present ‘Right-wing Anti-Traveller’ administration, as predicted by Morgan Kelly, to malinger on …. Sinn Fein will emerge as the largest party in the next election in the 26. Methinks that co-habiting with the dour DUP might have dampened their appetite for coalition ….. and memories of the McDowell, Harney, McCreevy, Aherne ordoliberal quartet remain toxic to thinking culchies. As adepts of the ‘long road’ methinks the thinking SF would prefer to bide time for the overall majority …. time will tell!

JTO,
I think you have a point there. However, I disagree with you on the composition of the next govt. it will in all probability be SF led as they are better organised, younger & better funded (cough). I am not sure what side of your cultural divide they are on. In reality, I think they have two wings I) consisting of a Catholics with guns wing II) a politically correct lefty wing.

Just think about all the bonus’ paid out to local authority managers over the years, for giving out permissions for events that had already happened.
By the time the legal people are finished with this, the GAA will want an extra 30 million to add to the 30 million they got for Pairc Ui Chaoimh, and why not.
Dublin City Council could also be looking for a sub for legal expenses.
It was another systems failure!!

Your description of SF (2 parts) is very accurate. The politically correct lefty wing is strong only in the large cities. Look at referenda results in Donegal. One of SF’s best counties for votes. But, very socially conservative and always votes against the SF line in referenda. Ditto a host of other rural counties.

Very unlikely that SF will have more TDs than FF.

FF finished 10 per cent ahead of SF in the local elections just 6 weeks ago.

The gap in seats was even greater as FF are more transfer-friendly than SF.

The polls continually overstate SF and understate FF.

The resurgence in the economy (I’ll stick my neck out and predict that GDP growth in 2014 will be far higher than anyone is currently predicting) will also help FF (notwithstanding that it is occurring under FG), as the theory that FF destroyed the economy for a generation will have been shown to be bunk.

Because of this growth, by 2016 the main feature of the Irish economy will be a shortage of housing and infrastructure bottlenecks – ideal scenario for FF.

By 2016 builders and developers will be back in fashion, pockets bulging and creating jobs by the thousand – ideal scenario for FF.

The Garth Brooks fiasco will help FF – it shows the FF way of doing things works.

The Atheist Labour Party will be totally wiped out. Please God. All the more so if Shane Ross’s tweet is correct and Ivana Batty is appointed to the cabinet. This will be seen as a declaration of war on Catholic Nationalist Ireland. I honestly believe that they could end up with 0 TDs. That’s the main reason FG will not lead the next government. It is not that FG will end up much smaller than FF (they might be just a little behind FF), but that they’ve boxed themselves into a situation where there only possible coalition junior partner will be wiped out.

You’d feel almost sorry for FG. They are doing a good job on the economy and unemployment. But, their longing for official approval from the Dublin 4 elites is damaging them in rural conservative Ireland.

The big unknown is Lucinda Creighton. No idea whether or not she forms a new party. If she does, the votes will come mainly from FG.

Could be an FF/SF coalition or an FF/Lucinda Creighton party coalition or even an FF/FG coalition. In each case I’m pretty confident FF would be the larger partner .I can live with any of these combination, but I’d prefer the middle one. The main thing is that this period (since 2011) of the Dublin 4 elites running the country and gobsh*tes like Owen Keegan having dictatorial powers will be over. Things will be done as they have traditionally been done in Ireland – decisions based on pragmatism and not ideology – rules bent if it achieves results – etc etc. Dublin 4 liberals will be horrified, of course, but the important thing is that post-2016 election a repeat of today’s fiasco will be impossible.

Its not so much a systems failure as a clash between two completely different ways of doing things. The two can not co-exist. One must prevail over the other.

On the one hand, the traditional Irish way (mainly FF, but older FG too) – this way puts priority on achieving results – pragmatism before ideology – rules bent if its for the good of the country – flexibility. Over the years this way of doing things has achieved spectacular results. Ireland’s per capita GDP went from 55% of the UK level in 1922 to 120% in 2014.

On the other hand, the Dublin 4 loony-liberal way – absolute adherence to a set of rules that are formed on the basis of adherence to some imported ideology (needless to say, an ideology that no one in Ireland will ever have voted for) – once formed, absolutely no flexibility in implementing them – no regard for the good of the country – so, 400,000 fans disappointed, 250m (according to Kenny) lost to the economy, reputation damaged – makes not the slightest difference to Keegan – rules are rules in Keegan’s book and the 400,000 can go f*ck themselves.

You can’t run a country with two such completely different ways of doing things in conflict with each other at different levels of governance. One has to go. Pending a much-needed reorganisation of the governance of the country to eliminate this duopoly, the obvious solution would be to sack Owen Keegan and replace him with
Bertie Aherne. If Owen Keegan had been Taoiseach in 1998 (God forbid), does anyone think there would have been a Good Friday Agreement? But, Bertie achieved it. Pragmatism often works, regardless of whether we’re talking about the GFA or Garth Brooks.

John
In the interests of full disclosure
A) how many Garth tickets do you have? (none for me..)
B) you are seemingly not from D4 (me neither) but we might imagine you fron a Sf county..yes?
Or are you Bertie..

a) so, you have no dog in this fight. Nor I. Q: why do you think that you would win? “m’lud I want to appeal against the proper application of planning decisions” That attitude is redolent of the worst excesses of the times of you Precious.
b) So, to top it all, you dont live in this country even! I may as well get on my horse and whinge about the planning decisions about the Oddessey Arena.

The 26-county rump isn’t a country. The view that the 6 northern counties are not part of the country may be all the rage while the FG/Stickie combination are in power, but won’t last 5 minutes when FF alone or FF/SF are in power.

Lots of grounds for suing:

(a) Incompetence – why didn’t Keegan state publicly that he wouldn’t allow 5 concerts back in January when they were first announced?

(b) Discrimination – the forced cancellation of the concerts was not based on genuine planning considerations, but part of the culture wars that the Dublin 4 elites are waging against the rest of Ireland. They hate the GAA. They hate Peter Aiken. They hate country music. They hate ‘culchies’ and ‘northerners’. They were never going to allow these concerts. They were like 5 red rags to a bull as far as the Dublin 4 elites were concerned. If the gig had been Pussy Riot, or the Austrian transvestite, they’d have got a licence for 365 days.

(c) It now turns out that lots of signatures in the petition from residents opposing the concerts were forged. Gardai are investigating. Let’s hope for lots of prosecutions and heavy jail sentences. Far more local residents signed the petition asking for the concerts to go ahead than signed the petition asking for the concerts to be cancelled. But, they were ignored.

I do hope Peter Aiken sues. Peter Aiken is worth 10,000 Owen Keegans.

But, if not, I hope he exacts revenge in other ways. Peter Aiken isn’t some capucchinno-swilling Dublin 4 elitist, but a northerner, so take it from me, whatever is said in public for diplomatic reasons, revenge will be uppermost in his mind. He will be planning it even as I write. One likely way is that Aiken will stage the concerts in Belfast next year, not 5 concerts, but 6, 7, 8, 9, 10. People will travel from every corner of Ireland. Thanks to Bertie’s motorways, travel is easy in Ireland now. The biggest music event in the history of Ireland. Let’s see how popular Keegan is when that happens and 500million euros is sucked out of the Dublin economy and transferred north.

Regarding the ‘worst excesses of the Celtic Tiger times’, you are clearly one of those loony-liberals who hated everything about the Celtic Tiger because of the prosperity it brought to so many in Ireland who never had it before. Bad news for you. The Celtic Tiger is on the way back. Builders and developers are on the way back. Fianna Fail are on the way back.

Regulatory capture plagues Ireland. Sad though it is to see so many people inconvenienced over the cancellation of such an important cultural event, it is very positive to see an Irish local authority taking its regulatory responsibilities seriously.

Hope Aiken doesn’t sue. It would be a pity to see him add to his losses.

I very much hope that JtO’s prediction of up to 10 concerts in Ireland next year promoted by Aiken comes about, whether in Belfast or somewhere else. I hope he does not choose a venue that is a prime candidate for enraged local opposition and refusal of permission as he did on this occasion.

As for the “revenge, revenge” gibbering from John the WooHoo, Mapel 10 ring any bells?
this pathetic gnashing of the teeth is one that is so common from the 70s and 80s from the Wee 6. All that inbred politics has warped their minds.
Signing off from the depths of the whest. I must go and swill some cappuchino now. Or maybe tae.

Like Brazil fans this morning, you are clearly traumatised by the fact that the Sam Maguire Cup has only gone once to a western county in the past quarter century, while it has gone 9 times to a northern county.

Croke Park was the only venue available, since Bertie’s plan to build a stadium well away from centres of population was scuppered by the same gobsh*tes, who said we didn’t need ai as we had Croke Park.

Its a myth that local residents were largely opposed. The petition against the concert attracted 373 signatures, of which 100 were forged. The petition in favour received 2,000 signatures.

It will be humiliating for Dublin when the concerts are staged in Belfast, since it will show the world that Belfast can stage concerts, while Dublin can’t.

Belfast can do lots that Dublin cant. Discriminate against gays, have cantonisation, be proud of a SHIP THAT SUNK ON ITS MAIDEN VOYAGE :), have the most bombed hotel in Europe, flegs, muriels glorifying terrorists, forced power sharing to stop the kids spitting their dummies, all in all a wonderful legacy.
Achill is so much …quiter.

Congrats on Germany victory last night. If its Germany v Argentina, do you think there’ll be a punch-up in the Vatican between the two Popes?

A plebiscite would have been an excellent idea. But, the nimbys in Ireland would never agree to it because they’d lose it.

You need to understand that there is a difference in attitude between Ireland and Germany. In Germany you can build things with a minimum of fuss. That’s actually true in Northern Ireland also. In the Republic of Ireland a minority of malcontents (which is usually a weird combination of assorted lefties/ecoloons/begrudgers etc) try to stop every building project and every event.

Thus,

Bertie Aherne proposed a tunnel from Dublin Port. The nuts opposed it and delayed it for years. They said half of north Dublin would fall down if it went ahead. In the end Bertie triumphed, it was built and has saved scores of lives in Dublin from reduced traffic accidents and greatly reduced road congestion.

Bertie Aherne proposed a motorway network for Ireland in 1997. Germany had motorways since the 1930s. Northern Ireland had them in 1964. But, the Republic of Ireland still had none in 1997. The road deaths rate then in Ireland was twice that of Germany. Again the nuts opposed it and delayed every road for years. Again in the end Bertie triumphed, the motorways were built and Ireland’s road deaths rate fell by 75 per cent. By 2012 it was actually lower than Germany’s.

Bertie Aherne proposed a new T2 terminal for Dublin Airport. Again delayed by protests for years. We didn’t need it, they said. The old one would do (although it was a slum). When it was built, the economist Colm McCarthy argued on this very site that it should be mothballed. But, it went ahead. Now in 2014 Ireland is having a tourist boom, and the numbers passing through Dublin airport are up 3million in 2 years. If it hadn’t been built, the queues at immigration would now stretch to the border.

However, it wasn’t all triumph for Bertie Ahern. The nuts won in relation to a new stadium away from centres of population and in relation to a new hospital for sick children, which they have delayed for years and years.

All these things would be built without a fraction of the hassle in Germany.

My advice to Angela Merkel: next time Enda Kenny comes with his hand outstretched and his poor-mouth act, looking for financial relief on the debt (which Ireland doesn’t actually need because its economy is growing fast anyway and its deficit is falling rapidly), she should tell him ‘if things are as bad as you say and you’re as skint as you say, how come you threw out plans for concerts that would have put 250 million euros inn the economy?’

JTO
Look on the bright side, the god fearing culchies can get a refund on tickets & hotels & go watch Tyrone destroy the GAA with their brand of puke football.
Nice try at sabotaging our govts negotiating strategy on debt relief. Typical FF, party before country with you .

It’s good to have you back on this forum. But sad to see that your language has degenerated, and your tone too.

I also think your analysis of the urban/rural divide is 20 or 30 years out of date. Most young people I know in rural Ireland are liberal. They have little love for the Catholic Church or Fianna Fail. They tend to support gay marriage and are more interested in Rhianna and Kimye than Garth Brooks. And I know lots of GAA supporters in Dublin.

I have actually chosen my nome de guerre with Francis in mind, for whom Benedict made place, when he realized that he is too old to let fire and brimstone, sulphur and phosphor rain on the italian cardinals and their bankers.

Benedict is/was one of the most intellectual popes of all times, with a deep understanding in philosophy, including Paul Feyerabends Against Methods.
I like him tremendously.

On the World Cup I actually think, it will be a rerun of the classic Krauts vs Oranje, for which I have the following youtubes, just for starters:

Apologies for being on-topic but the paper linked here is a very useful contribution from members of the new IGEES. Incidentally Mr O’ Donnell, as far as I know, all or almost all of them were not in the civil service during the boom.

Yes, that is my understanding that IGEES are new recruits – and I welcome this development …..

That said, the ESRI bunch were in the ESRI during the boom ….. and I have yet to find a reasonably plausible explanation of ‘how’ and ‘why’ this reasonably bright bunch and one assumes, acknowledging that assumptions are always dangerous, the reasonably bright bunch of Irish academics …. FAILED ABYSMALLY in their duty of care to the Citizenry in spotting and advising on that ‘spot of bother’ recently.

I should note that the paper does actually take on some important instances of Irish regulatory capture, although in an indirect manner.

– A shift from prescriptive approaches in favour of carbon taxation as the main means towards reducing carbon emissions could resolve major inefficiencies in energy supply that have been designed in partly as a consequence of regulatory capture.

– Increased competition in the provision of finance stands in opposition to the capture of financial sector policy by interests trying to force up bank profitability.

– More effective competition policy implies at least some tackling of regulatory capture, both by the competition authorities and by other regulators.

Thanks for the Northern humour and the sharp observations of our funny little ways. As a simple businessman I’ve often been struck by the uncanny similarity between business life and government dealing in India and in Ireland….

The problem is that an anti-businesss anti-everthing culture has developed in certain sectors of Irish society in recent years. In this culture all businessmen and wealth-creators and anybody who tries to get something done are portrayed as crooks, while bureaucrats, pen-pushers and jobsworths are lauded.

This culture has been largely propagated by the Dublin 4 media, which has been taken over completely by Marxists/leftists of one type or another. Look at Ireland’s Paper of Record Lies. You might think that a paper that is so expensive that only the middle-class can afford it, might be ever so slightly pro-business in its outlook. After all, their UK-equivalents, The Telegraph and The Times are. But, the opposite is the case in Ireland. It rivals Socialist Worker. Every day of the week you get a different brand of Marxist/leftist/anti-business bullshit. Every one of the many brands of loony-left Marxist drivel is catered for: monday: Una Doolally, tuesday: Fintan O’Foole; wednesday: Vincent BrowneStuff, thursday: Eamonn McCann, who was indoctrinated when he shared a flat with Leon Trotsky in Paris in 1887 and who has been spouting Trotskyite claptrap ever since, and so and so on.

Some will say this post is off-topic. Far from it. Its about the structural reform needed to have a good economy. By far the most important structural reform would be to create a culture in which businessmen (like yourself) and wealth-creators are admired and loony Marxist-bullshit commentators are binned.

You’re out of your tree, John. And I mean that in the nicest possible way. Have you considered going back into retirement? As the saying goes, better to remain silent and be thought a fool than to speak and to remove all doubt.

No ban on JTO please. I find him entertaining and informative. The sophisticated urban commentariat looks down on centre right parties in general (FF in particular), the GAA, country music, the Catholic church, nordies, the full Irish with tae, people who make money out of trade and those who have their dinner in the middle of the day. Some of this is for good reason, some not. Someone has to speak up for these people & JTO appears to be the only one with the time and eloquence to do so.

Apologies to Galway. I stand corrected. I was recalling from memory, rather than looking up the records. I forgot Galway won in 1998 as well. I was at the 2001 final. Excellent Galway team. I’ve been at around 45 finals including the Galway 3-in-a-row 1964-66, brilliant team) since my first to see Down in 1960, but missed the 1998 final, so that must be why I forgot. However, in the past 25 years teams north of the artificial border have won 9: Tyrone 3, Down 2, Donegal 2, Derry (or, as most on this site call it, Londonderry) 1, Armagh 1. So, my point basically still stands, although you correctly observed that I inadvertently exaggerated it slightly.

Next time you’re having a drink with Enda Kenny, pass on my congratulations on his heroic attempts to do a ‘Bertie’ in relation to the Garth Brooks concerts. I am praying he succeeds. But, warn him that, if he does succeed, he’ll feel the full wrath of Dublin 4 outrage in the media for the next 2 weeks. I can already see Fintan O’Toole sharpening in his dagger, ready to plunge it into Enda’s back, should he succeed in having the concerts restored.

I am not at all upset with the Dublin 4 liberals for their insults towards me or want them banned, Having lived as a child in a loyalist area in N. Ireland in early 1960s, this is small beer. And, as a Christian, I forgive them and make allowances for the traumatic week they’ve had, what with the return of the Celtic Tiger, rural Ireland on the brink of revolution over Garth Brooks, and the Pope winning the World Cup.

However, on reflection, I do apologise for calling Ernie a ‘Marxist loon’. I try to avoid personal insults on fellow-posters here (although I have no such inhibitions on media commentators). It was heat-of-moment automatic response to his calling me ‘out of your tree’. When you insult a Tyrone man, you get retaliated on instantly, as a few teams have found out in recent years in Croke Park. But, it wasn’t appropriate for this site, so apologies to Ernie.

The world’s largest companies are hoarding cash and cutting productive investment at the same time. The Financial Times reportsa survey from one leading ratings’ agency, Standard & Poor’s, which shows that the 2,000 largest private firms globally are sitting on a cash mountain of $4.5 trillion, which is approximately double the size of Britain’s annual GDP. Yet capital expenditure, or ‘capex’ by those firms fell by 1% in 2013 and is projected to fall by 0.5% this year. But this does not presage an upturn. Steeper declines in productive investment are projected by those firms in both 2015 and 2016. Taken together, if these projections materialise the actual and projected falls in capex over the 4 years from 2013 to 2016 will approach the calamitous fall in productive investment seen at the depth of the recession in 2009. This is shown in the FT’s chart below.

A gas field was discovered off the coast of Mayo (a county on the west coast of Ireland). It was discovered in 1996. Shell Oil have been trying to develop the gas field since 1999. In 2014 not one square foot of gas has come ashore. There has been objection after objection by NIMBYists.

The field is sufficiently large to make Ireland independent of imported gas from the North Sea and Russia. Dependence on imported gas is the biggest risk-factor for the Irish economy. If the 2,000 mile gas pipeline from Russia to Ireland was disrupted by Al Quada or other political unrest, it would be disastrous for Ireland.

The NIMBY protestors claim a gas pipeline is too dangerous, despite gas pipelines being operated safely all over the world. During the period the protestors have been stopping the gas coming ashore, over 200 people have been killed in road accidents in county Mayo. Statistically, there is a far greater risk of fatalities from oil lorries driving around Mayo delivering oil for home heating (that people only need to heat their homes because the gas is not coming ashore) than there is from a gas pipeline.

Most of the protestors are not local, but professional NIMBYists from Dublin. Most local people in Mayo want the gas to come ashore.

If a gas field was discovered off the coast of Germany, that was sufficiently large to make Germany independent of gas from Russia, I do not think it would be delayed by 18 years (and counting) before it was brought ashore.

The same NIMBYists are preventing a badly-needed Children’s Hospital in Dublin. If a location in central Dublin is selected, they object because its too far for people from outside Dublin to get to. If a location on the outskirts of Dublin is selected, they object because its too far for people from central Dublin to get to. You might think that treating sick children would make the NIMBYists relent a little, but no.

A few years ago a new road to replace a killer road (narrow, bendy) was stopped by NIMBYists because they said it was too close to a tree that was a meeting-place for fairies (i.e. ‘fairies’ as in leprechauns – not the rude word for ‘gays’ that used to be common). And at the same time another new road to replace another killer road was delayed for years by NIMBYists because they said the route went over land that had a rare type of grass. As you know, grass is very rare in Ireland.

“The persistence of such differences creates the risk of permanent imbalances. With this in mind, I believe that structural reforms in each country are enough of a common interest to justify that they are made subject to discipline at the community level. ”

As dangerous and unwelcome a speech as I have heard in a long time. My answer to that is no, no, no and no again.

Structural reforms means only one thing, impoverish the poor and create a working poor to the purpose of maintaining competitiveness and keeping the better off even better off. The true reality of the desire for ‘structural reform’ is to slough-off an underclass that has no purchasing power, so that sufficient purchasing power will remain in the hands of a remaining middle and upper class to buy the products of industrialised nations.

Now Draghi and the ECB want a European crusade against the poor.

Ireland and other countries should simply say no. Enough is enough from Europe. In fact enough is far too much from Europe. If Ireland and other societies are to be stressed and broken through so called stability and growth packs, convergence criteria etc, then let this country be stressed together as one unit.
How dare Draghi, or whatever idealogue wrote the speech for him, attempt to legislate at European level, how this society should treat its less well-off. The answer is no, no, and no again.

I hope this speech meets with the response it deserves. Either way Draghi has lost it. His moral compass is gone, and his moral authority is finished.

I’m talking about your schtick – your endless playing the part of ‘aggrieved caricature X’, patronishing (and speaking down to) the rest of the country just so you can jump on your favourite hobby horses (D4 heads, montrose liberals, whatever) It’s a part you play, that’s all. Im not angry though pal, just tired.

Might it not simply be largely a case of one Italian (Draghi) demolishing the misplaced reading of another (Renzi) as to the limits of flexibility acceptable to Germany and other major states in relation to agreed EU – and not just Euro Area – budgetary policy?

The bottom line is that national governments carry the major responsibility for sorting out the economic problems of their own countries. In terms of the maintenance of functioning democracies across Europe, it cannot be any other way. (For a measure of the capacity of the government of this country to do so, I would refer you to the main evening news).

Yes. A very dangerous speech. Read it last night and was ‘struck’ by its blatent neoliberal intent. Not a surprise that he ‘thought’ it – but that he has again made it so explicit; he is on record as favouring demolition of the EU Welfare State ….

@all

Speaking of the ‘EU Welfare State’ – looks like a group of Farmers on EU Welfare will now be able to transfer said welfare and ‘Avoid Capital Gains Tax, against the advice of the DoF, and facilitated by Minister Coveney (the brudder of the head of GlanBia) and Minister Noonan; mus be FG supporters …

… and if any of them over 70, the also get ‘free’ medical cards ….

… and if childer under 6 – ditto.

Spose this must represent a ‘Particular form of the Irish Universal’!

Meanwhile Disability Support Groups get their funding cut or abolished!

back in the 1820s, as Cattle were deemed more profitable than wheat, the people were simply pushed off the land into penury. Spose the ‘cows’ will be getting ‘veterinary medical card’ next …..

1) In my experience the young from the ‘country’ are far more left leaning and less mass/Garth-brooks attenders than the previous generation. Though perhaps they will progress more to the right with age, I can’t see mass making a come back. Too many scandals too badly handled. You’re talking about the instant data generation, you’ll never convince them there’s a god.

2) The ‘pragmatic’ approach you promote is what brought Ireland the bank guarantee. Add hoc, a few FF/Green ministers have a late night meeting and decide to punt the country on its banks. You may argue that it was a good decision. To which I would say, the scope of the guarantee was absurd.

@DOCM
“Might it not simply be largely a case of one Italian (Draghi) demolishing the misplaced reading of another (Renzi) as to the limits of flexibility acceptable to Germany and other major states in relation to agreed EU – and not just Euro Area – budgetary policy?…”

This is the head of the ECB in a major speech. It can hardly be construed as having just a sideswipe at Renzi. It is clearly the new EZ way of bringing reluctant and recalcitrant populations to heel. Give them no choice at national level. Bind them in through legislation at EU/EZ level.
And bind them to a competitiveness agenda that benefits the better off, but impoverishes the less well-off.

There is a touch of desperation about it. The proposal has no chance of succeeding. The ECB cannot manage to get uniform interest rates to businesses throughout the EZ, which is its job to do, but seems to have the time and energy to promote an anti-poor social re-engineering program throughout Europe.
[A bit like Ireland giving lectures on how to do business in the middle of the Garth Brooks debacle, only far more serious].
The proposal deserves to be consigned to oblivion, as does Draghi if he persists with it.

By itself, GDP is a terrible measure of Irish economic activity, and the manufacturing indices quoted by JtO provide a good illustration of this. Pharmaceuticals is up 83.2% by value and 81.5% by volume year-on-year, which accounts for most of the change. The implications for overall Irish employment, personal incomes and debt sustainability are marginal.

Just as the pharma patent cliff was a big issue for GDP, but only marginally relevant to real economic activity in the country, this is too.

Its only real economic significance is in the meta territory. The Government will be able to get away with a smaller fiscal adjustment, in effect because the EU and related institutions focus their attention on GDP, implicitly pretending that a boom in Irish pharma exports makes our debt more sustainable.

I actually thought that in terms of analysis, it was a very good speech. It was the quotation below that prompted my question.

“If some governments retain the ability to stabilise their economies but others do not, then it becomes more plausible that economic divergence will occur. This is one channel through which the cohesion of the Union can be affected. This ability depends on keeping debt low and budget deficits close to zero when output grows at potential, not on having more flexibility in the existing rules.”

However, it is Draghi’s proposal on EU formal involvement in the process of structural reform that I found most interesting. It cannot IMHO happen without treaty revision. This raises the question of why he proposed it. It suggests to me that the possibility of a re-opening of the treaties may be looming (and not just because David Cameron is looking for such a development). It would boil down to a kind of review mechanism, one would assume, which would allow national governments to shift some of the political odium involved. Indeed, Draghi makes this point, if indirectly.

It worked for us! At least until the Troika left.

cf. the views of Professor Fitzgerald which I posted on the Orphanides thread.

Call me stupid and a slow learner but it took me ages to realise that certain names prevent a post being uploaded and that posts are often routinely deleted. I only access this site in the evenings and then only a few times a week so I often look at an ‘old’ thread and try to follow it only to discover that some comments are obviously referring to a post that has been deleted. The only time I recall this being done logically was when Prof. Tol (I think) would allow a post to stand but edit it and insert something like ‘subsequent paragraph deleted as it contained personal abuse or potential libel’ (or words to that effect) and then the rest of the post would stand with the poster’s name and time of the post. I would like if all moderators used this approach.

How about all commenters just stop abusing people ? Im not saying that self righteously (as i do it myself in places at times) but the amount of irrelevant, idiotic grudges held around here is beyond tedious.

The ‘structural’ reforms discussed actually have surprisingly limited impact, although it should be noted that they are estimated by using the ESRI’s HERMES model. Consequently, the model’s structure plays a significant role. For example, labour is assumed to bargain for after tax real wages, so a rise in the Local Property Tax , offset by a reduction in income tax, would reduce nominal wages and so boost employment and output.
The impact of active labour market policies is also difficult to incorporate into the model, so it is achieved by reducing migration , which ensures the labour supply is lower and so any given change in employment has a bigger impact on the existing level of unemployment. The unemployment rate falls but real GDP actually declines due to the lower population, a result which was a puzzle for an earlier post (n.b. real GDP per capita does rise).

“OECD work suggests that the potential gains from further structural reforms in Ireland are lower than for other OECD member countries, reflecting the success of previous reform efforts and the relative openness and flexibility of the Irish economy.”

Insofar as there remained any glaring gaps, the Troika identified them (notably property tax, water charges and professional services). These continued to exist because filling them was not required to maintain “the relative openess and flexibility” of the Irish economy. The dog’s dinner being made of the steps required to fill them in is a measure not only of the ineptitude of the country’s political class but also of the entrenched interests of those impacted by the measures actually agreed (which do no more than to bring the country into line with other countries in the EU and especially of the Euro Area).

“This proclivity to universalise benefits means that, if the State is to deliver some free or subsidised service to the bottom half of the income distribution, it must be delivered to the top half as well, which doubles the cost. Curiously those on the political left, supposedly most devoted to targeting at the poor and disadvantaged, seem most wedded to universal benefits. The inevitable result is high levels of public spending with blunted redistributive impact, necessarily accompanied by high levels of taxation now, or later.

“In many developed European countries, the state spends up to 50pc of all national income. There is only limited re-distribution to show for it, due to the prevalence of universal entitlements combined with numerous taxes which are regressive in their impact, which is true of most indirect taxes. Financing universal benefits with taxes paid by everybody sends the public’s money on a pointless merry-go-round intermediated by politicians. It has more to do with the re-distribution of votes than with the re-distribution of income.”

The fault in this logic is that the top and bottom halves of the income distribution are not always made up of the same people. The citizens of the countries in question – being the most successful economically on the planet – recognise this and return for security throughout their lives – in terms of equality, dignity and income,- are prepared to pay a high level of taxes in order to achieve this desirable outcome.

As to the giveaways, they do not seem to amount to enough to break through the limitations on the government’s room for budgetary manoeuvre.

Courtesy of Open Europe, these are the thoughts of the incoming President of the European Commission, including on those limitations.

“In an interview with Bild am Sonntag, European Commission President-designate Jean-Claude Juncker, argued that “It is right that there are concerns [among EU citizens] that the EU is interfering in things that are not its concern… for this reason, I’ll create a European Commissioner for cutting bureaucracy.” He also laid out his programme for the Presidency, saying that his priorities are “creating the conditions” for growth and jobs; a single market for energy; upholding the “sancrosanct” EU fiscal rules; and getting a “fair deal with Britain”. He added that, “The British also need to know: I’m not a fanatical federalist. I want to build a better Europe with our member states and citizens”.